Life insurance and SMSFs (45387286) - Online

Self-managed superannuation funds (SMSFs) provide a compelling opportunity for structuring members’ life insurance needs. However, there may be tax implications for the SMSF trustees, as well as the members, where the trustees pay a benefit with the proceeds from a life insurance policy. An understanding of these implications may help SMSF trustees make the correct decisions for their fund.

The Super System Review that was released to the then Government in 2010 noted that less than 13% per cent of SMSFs have life insurance. Further, SMSF members were more likely to own appropriate levels of life insurance, or be able to own life insurance outside of their SMSF, than members of other superannuation funds.

Learning objectives

• Outline the life insurance requirement of SMSF trustees
• Determine the taxation benefits of life insurance policies for SMSF trustees
• Identify the taxation implications on the SMSF members or the members’ beneficiaries

Audience

Accountants who are licensed to provide SMSF advice:
• Employees of accountants who are licenced to provide SMSF advice
• SMSF auditors
• Trustees of SMSFs